Successful Companies Master Positioning and Distribution
Positioning that touches on the unique wants and needs of your customers coupled with effective distribution that delivers your service or product quickly can give your business a distinct and profitable edge.
There are many ways for a business to be unique, from minor pricing, packaging, and service differences to significant feature and benefit contrasts with the competition. In all cases, your business's uniqueness has to be examined in relation to other products and services that your target buyer is currently using (i.e., things that your business hopes to replace with its own offerings). Differences really don't matter unless they are important enough to the customer to influence his or her purchasing decision.
"Differentiation" is the collection of differences in features and benefits versus competitive products. You've already begun the process of thinking about your positioning if you've constructed a unique selling proposition (USP) for your product or business.
The key is to determine how important these collective differences are to the buyer. In some cases, there may actually be little or no difference between your product or service and that of your competitors. Or, the differences may be very difficult to communicate (think of the difference between Coke and Pepsi). In that case, it's up to you to create some differences.
Granulated white sugar is essentially indistinguishable from one brand to another. Physical product features are the same for each brand. Product benefits and usage are identical. However, even plain white sugar can be differentiated with pricing, packaging, and quality image supported by advertising.
Consumers consistently rank price as one of the most important features of branded granulated sugars in making a purchase decision. Another important feature is the brand image of quality, which reinforces this image with a higher price versus generic brands.
Effective position requires that you create and communicate meaningful differences in your product or service to your target buyer via packaging, pricing, features and benefits, product design, colors, advertising and promotion mediums, public relations events, and even spokespersons. Everything should work together to promote a consistent image for your product or service. Correct positioning can be thought of as solving the marketing mix problems of the "Four P's of Marketing":
- promotion or advertising
- place (distribution)
as well as the "Four C's":
- company definition
- competitors' identification
- consumer target definition
- channels (distribution, again)
More simply, Al Ries and Jack Trout, authors of Marketing Warfare, say that "positioning is what you do to the mind of the prospect."
How to Strengthen Product Positioning
Many small companies believe there is little they can do to really position their products and services because they spend little or no money to promote their products to their target buyers. However, almost all products and services come "packaged" in one form or another. Even service businesses have uniforms, logos, slogans, types of vehicles, specialized greetings, service procedures, follow-up procedures, and a host of unique ways to differentiate themselves from their competitors.
Positioning is ordinarily a very important factor in creating effective advertising and promotion. In fact, the less money spent on advertising and promotion, the more important correct and consistent positioning becomes for a small company's products. Small companies, like large ones, must:
- Work at consciously identifying brand features and benefits that are unique to differentiate the company and its products from the competition.
- Communicate and test which differences are most important to buyers and consumers in deciding to purchase your products rather than those of competitors.
- Work at communicating the most unique and important differences to buyers and consumers to create "branded value" and a "brand personality."
Qualitative research such as interviews with a small number of people, or more reliable (but expensive) quantitative research, can be done to determine how buyers and end-users understand and value your business differences with competitors. This research can help generate a unique selling proposition for the business and help create effective advertising and promotion.
Product Positioning Is Essential for All Businesses
A company must be careful not to "overposition," which can be defined as making promises about features and benefits that the product or business does not always deliver. Over positioning can also mean making promises about product features and benefits that are not apparent to users/buyers.
You must also avoid "underpositioning," which can be defined as failing to describe all the features and benefits that the product or business delivers or has, or failing to describe distinctive product features and benefits that are apparent to users/buyers.
Also, it's important to avoid confusing people with product or service features and benefits. Features are the descriptors of a product (e.g., colors, smells, shapes, packaging, prices), while benefits are what the product does for its buyers (e.g., satisfaction, more confidence, more beauty, faster task completion). It's often better to single out a few key features, rather than overwhelming the customer with lengthy lists of details.
FargoGas: "Fastest gas in the West!"
Everyone who drives wants to fill up their gas tank quickly, cheaply, and conveniently as possible. A small local gas company (in Fargo, ND) with one or two local service stations could differentiate itself from its competition by advertising its business as the fastest fill-up service, with on-premise signs, handouts, premiums, T-shirts, local tie-ins, and other reminders. The gas tank pumping islands could be maintained at maximum pressures and speed of filling at all times, with the most powerful gasoline pumps available.
Premiums, given away with every 25 and 100 gallons, credited on a frequent filler card, could reinforce this positioning:
- road-runner logo-imprinted handiwipe cloth with the company slogan
- baseball caps or winter sock hats
- model cars, boats, motorcycles, etc.
If the station's target consumer is primarily male and 16-49, then local celebrity speeders (e.g., dragsters, racing cars, motorcycles, etc.) could exhibit their vehicles at the station. Logos and slogans on the vehicles could also promote the station's market positioning. Further protection could be gained by ensuring that prices are competitive with other service stations. A friendly "station personality" could be adopted by all employees, based on currently popular media figures.
If a local competitor decides to try the same approach, with the same equipment, they would have to work very hard and spend significantly more money to compete with the preemptive positioning of FargoGas as the "fastest" in the market.
Distribution Strategy Is Key to Successful Marketing
Part of the challenge of marketing is figuring out which distribution method to use for your business. As soon as you decide which business or product category to compete in, distribution decisions must be made based upon what your competition is doing.
Service businesses may or may not be subject to the same physical distribution limitations as product-based businesses. For example, financial planning services may be offered from printed material, sold at retail, sold by consultants face-to-face, or delivered electronically by computer, by phone and by correspondence — a multitude of different distribution systems.
Distribution decisions have significant implications for:
- product margins and profits
- marketing budgets
- final retail pricing
- sales management practices
Distribution channels can include one or more of these options:
- retail — stores selling to final consumer buyers (one store, or a chain of stores)
- wholesale — an intermediary distribution channel that usually sells to retail stores
- direct mail — generally catalog merchants that sell directly to consumer buyers at retail prices plus shipping (e.g., Land's End, L.L. Bean) via mail
- telemarketing — merchants selling directly to consumer buyers at retail via phones
- cybermarketing — merchants selling directly to consumer buyers at retail prices, or business-to-business products and services at wholesale prices via computer networks
- sales force — salaried employees of a company, or independent commissioned representatives who usually sell products for more than one company
For more on this subject, see our discussion of distribution and sales methods.
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